Collection Agency Business Plan

Collection Agency Articles

If you are considering starting your own debt collection business, you should have some financial knowledge or have experience in billing and debt collection. A debt collector charges another company some pre-established percentage of the outstanding debts owed by the business’s clients. By using this business plan, you will determine your ability to run a successful collection agency by setting up your company properly to start earning money as a debt collector.

Business Model

The business model presented in the plan for a collection agency is a company that recovers debts that are past due as a result of the debtors’ failure to submit payment. The company may purchase these debt obligations at a percentage of their face value with the intent to settle the obligation with the debtor for a substantially reduced payment amount or it could secure bad debts on behalf of clients for a fee percentage of the amount collected. These and other services of the company will be further explained in this section.

Business Summary

Market Positioning

Many businesses offer credits to their customers but sometimes it becomes very hard to recover these debts, so companies hire the services of collection agencies. This part of the plan outlines the strategies to position the company within its target market by offering reliable and effective collection services.

Operations Plan

A collection agency is usually hires because of its high success ratio. This section of the business plan will further describe the services and the operations plan of the follection agency, such as maintaining a call center that will house staff members responsible for managing phone calls and correspondence with each debtor, along with the training of professional collectors who have a proven record of success in the business. It will also outline the internal processes to engage in a collection’s contract.

Marketing Plan

Approximately 40% of the population has issues with their credit profiles and as such, the market for credit advisory services and debt collection is a large one, especially in today’s economic climate. In this chapter of the business plan there is an explanation of the target market and the strategies to attract potential companies to use the agency’s services.

Market Segmentation

The target market consists of businesses that have substantial receivables such as hospitals, medical clinics, music and book clubs, credit card companies and others. The business model described in the business plan will be able to effectively assist thousands of companies with their debt collection needs. Here, you will find a complete description and characteristics of the potential customers for the collection agency.

Promotional Strategies

In this section there is a description of how the business intends to market its services to the general public. These strategies include traditional printed advertisements and ads placed on search engines on the Internet. The company will also use direct sales to engage with corporate customers.

Financial Projections

The goal in this chapter is to address the financial projections of the collection agency business, describing revenues and major expenses and the strategies to keep them in line in order to maintain the profitability of the business.

Revenue Assumptions

When the debtor budges and pays his debt, the creditor pays the collection agency a percentage of the funds or assets that the agency recovers. This will be the main source of revenue for the company. In this section you will find a list of other sources and how these results are calculated.

Projecting Expenses

Here you will find a list of all major regular expenses a collection agency has such as rent and utilities, staff benefits, payroll, marketing expenses, phone bills, travel and vehicle costs, among others.

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